Ripple CTO emeritus David Schwartz has responded to a resurfaced 2020 academic paper by former SEC Chair Gary Gensler, which warned that broad adoption of deep learning in finance could lead to financial system fragility and economy-wide risks.
The discussion was revived by X user Andrew Curran, who suggested Gensler may have been "early to the party" in foreseeing systemic risks from AI adoption. Curran cited Torsten Slok, chief economist at Apollo, who recently warned that mass adoption of AI agents could trigger a bank run as they autonomously optimize user investments.
The November 2020 paper, titled "Deep Learning and Financial Stability", was co-authored by Gensler with Lily Bailey at MIT Sloan School of Management before Gensler became SEC head. It argued that financial sector regulatory regimes, built in an earlier era of data analytics, might fall short in addressing systemic risks from deep learning adoption.
Schwartz commented: "I think a lot of this makes sense. The part that doesn't is the 'they'll be so smart that they'll do dumb things' part." His response acknowledged general concerns about automated decisions being made en masse, while pushing back on the notion that more intelligent AI agents would produce more irrational outcomes.
The exchange highlights growing concerns about how thousands or millions of independently operating AI systems could interact within financial infrastructure, a question that could become increasingly important for regulators.
